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Canada's 'Big Six' Banks Raise Dividends, Plan Buybacks as Moratorium is Lifted

12/03/2021 | 11:30am EST

By Adriano Marchese

The six major Canadians banks have committed to buying back nearly 18 billion Canadian dollars, equivalent to roughly US$14.06 billion, of their stock, roughly US$14.06 billion and raise dividends after pandemic-related moratorium on capital distributions was lifted.

On Friday, the last of the Big Six Canadian banks reported fourth-quarter earnings, joining its peers in launching a share buyback program known as a normal-course issuer bid, or NCIB, and raising its dividend.

At the onset of the pandemic in March of last year, Canada's Office of the Superintendent of Financial Institutions, which supervises and regulates banks, insurance companies, as well as trust and loan companies, imposed capital distribution restrictions on Canadian financial institutions to buttress their resilience ahead of an expected but uncertain period of disruption.

The idea behind the restrictions was to ensure they had enough capital to withstand possible financial shocks, and to support credit supply for Canadian households and small businesses during the expected period of disruption, the agency said. Since that time, the banks have been accruing capital well beyond their regulated minimums.

On Nov. 4, these restrictions were lifted after the OSFI said the measures had served their purpose and were no longer necessary.

In recent days, the big banks have announced plans to distribute capital.

Bank of Nova Scotia increased its quarterly dividend by C$0.10 a share to C$1.00 and said that it received approval to purchase up to 24 million shares, or 2% of its common shares. At Monday's closing price of C$84.65, that equated to about C$2.03 billion in buybacks.

Royal Bank of Canada raised its quarterly dividend by 11% to C$1.20 from C$1.08, and unveiled plans to buy back up to 45 million of its 1.43 billion shares outstanding. At Monday's closing price of $128.14, the buyback was worth about C$5.77 billion.

National Bank of Canada, the smallest of the "Big Six" by market capitalization, said its board raised the quarterly dividend by 23% to C$0.87 from C$0.71, and approved the repurchase of up to 7 million shares. At Monday's closing price of C$96.56, the buyback was worth C$675.9 million.

Canadian Imperial Bank of Commerce raised its quarterly dividend by 10% to C$1.61 from C$1.46, and said it plans to buy back up to 10 million shares. The share buyback was worth C$1.37 billion at Monday's closing price of C$137.28 a share.

Toronto-Dominion Bank said it raised its quarterly dividend by almost 13% to C$0.89 from C$0.79, and aims to buy back up to 50 million shares, worth C$4.83 billion at Monday's closing price of C$96.50.

Bank of Montreal raised its quarterly dividend to C$1.33 a share for the first quarter, and said it intends to buy back 22.5 million common shares. At Monday's closing price of C$134.81, that amounted to a buyback of C$3.03 billion.

Write to Adriano Marchese at adriano.marchese@wsj.com

(END) Dow Jones Newswires

12-03-21 1130ET

Stocks mentioned in the article
ChangeLast1st jan.
BANK OF MONTREAL 0.61% 147.5 Delayed Quote.7.65%
CANADIAN IMPERIAL BANK OF COMMERCE 0.09% 163.53 Delayed Quote.12.12%
NATIONAL BANK OF CANADA 1.03% 100.6 Delayed Quote.3.28%
ROYAL BANK OF CANADA 0.26% 147.4 Delayed Quote.9.50%
THE BANK OF NOVA SCOTIA 0.79% 91.82 Delayed Quote.1.73%
THE TORONTO-DOMINION BANK 1.09% 102.75 Delayed Quote.4.79%
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Analyst Recommendations on NATIONAL BANK OF CANADA
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Sales 2022 9 499 M 7 621 M 7 621 M
Net income 2022 3 060 M 2 455 M 2 455 M
Net Debt 2022 - - -
P/E ratio 2022 11,0x
Yield 2022 3,65%
Capitalization 33 672 M 26 919 M 27 015 M
Capi. / Sales 2022 3,54x
Capi. / Sales 2023 3,31x
Nbr of Employees 26 920
Free-Float -
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Income Statement Evolution
Mean consensus HOLD
Number of Analysts 11
Last Close Price 99,60 CAD
Average target price 107,55 CAD
Spread / Average Target 7,98%
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Laurent Ferreira President, Chief Executive Officer & Director
Ghislain Parent Chief Financial Officer & Executive VP-Finance
Jean Houde Chairman
Julie LÚvesque Executive Vice President-Information Technology
Nathalie Genereux Executive Vice President-Operations
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